Avnet says it'll be profitable by December

Suffers sales fall in Q4

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Electronic components distributor Avnet has posted a Q4 loss but says it will break even over the next two quarters then return to profit.

It reported a net operating loss of $231 million, but this is mainly due to taking a $236.7 million charge for acquiring Kent Electronics on 8 June.

For the quarter which ended June 29, Avnet reported earnings, excluding the Kent charge and other special items, of $5.7 million, down from $72.5 million a year earlier.

Sales for the quarter fell 14 per cent to $2.54 billion from $2.95 billion a year earlier.

Roy Vallee, Avnet's CEO, said: "Business conditions over the last six to eight months have been deteriorating faster than I have experienced in my 30 years in this industry.

"We are currently estimating sales in the September quarter to decline by about 5 per cent to 10 per cent as compared with the June quarter, with gross margins under pressure. That should be largely offset by expense reductions, resulting in net income around break-even for the September quarter.

There is growing evidence that excess inventories are drying up and, in addition, end demand in the December quarter should be benefited by seasonal factors. As a result I am optimistic that sequential earnings growth will resume in the December quarter."

Including charges - full year profits were $97,000, down from $162.6 million in fiscal 2000.

Excluding charges, earnings for the year were $236.8 million compared with $193 million in 2000. ®